Gateway casino cashing out will be a blow to racing at Western Fair District
Gaming giant has said it was growing 'impatient' with negotiation process with the Western Fair
The head of London's Western Fair District says a decision by Gateway Casino to cash out and build a new casino in south London will be a blow to the fair's harness-racing operations.
"Obviously we're disappointed, but not totally surprised," said CEO Hugh Mitchell.
Disappointed because since Gateway took over casino operations from the Ontario Lottery and Gaming Corporation in 2016, the company has been trying to renegotiate an inherited lease that pays Western Fair $6.2 million a year. That lease was a holdover from a decision the provincial government made in the late 1990s to use casino leases as a way to backstop the horse racing industry, which typically does not earn enough to sustain itself.
Gateway, a private company, had planned a $140-million upgrade to add new gaming attractions and restaurants to the site near Old East Village. At the same time, the company has shown no interest in propping up racing.
'Serious jeopardy' for racing
Gateway plans to build and a new casino on leased land near Wharncliffe and Wonderland Roads, a move that will leave the Western Fair District staring down a massive hole in revenue.
"All we're asking of Gateway is to maintain and honour the existing terms of the lease that we had with government," said Mitchell. "Without that lease support, racing will be in serious jeopardy."
Mitchell said other operations at Western Fair — everything from an ice rink to a comedy club — will be somewhat affected by the casino's decision to leave, though not as much as harness racing.
Mitchell said he'd hoped a deal could be reached that would allow the casino and racetrack to continue to coexist, saying the two businesses helped complement each other.
Ward 2 Coun. Shawn Lewis said he'd prefer to see the casino stay and expand as planned, saying it would have helped form an entertainment district in the area.
"Frankly, I'm surprised and a little disappointed," said Lewis. "The casino is a perfect fit [at Western Fair]. They don't have zoning at the Wonderland Road location. I'm frankly not prepared to approve that zoning. We have to have more talks about this."
But Gateway spokesperson Rob Mitchell said the time for talking about a new lease at Western Fair is over.
Gateway planned to invest $140 million in a new complex with 1,200 slot machines and about 50 live table games at the Fair District, but Mitchell says the company ran into multiple obstacles in talks with the city.
"There were issues about the existing infrastructure there, how it might be incorporated into a new construction," he said. "There were issues about the land and the need for an architectural study. It just became unrealistic to purse that site any further."
Gateway has said the $6.2-million lease was well above market value, and a persistent sticking point in complicated three-way negotiations with the Fair District and the city.
The city currently collects about $5 million a year in slots revenue from the casino at the Western Fair, which sits on land the Fair owns jointly with the city. That revenue will continue to flow to city coffers so long as Gateway continues to operate within city limits.
Rob Mitchell said Gateway will continue to honour its current lease until it expires in 2020.
"One thing that hasn't changed is that we are absolutely committed to building a new casino in London," he said.
Deal depends on city
Coun. Josh Morgan, who sits on Western Fair's board as a council appointee, said it's "unfortunate" Gateway is leaving the Fair. But he said it's positive they're still looking at space in the city.
As to Gateway's chances of getting the required zoning for a new site, Morgan didn't want to speculate.
Western Fair will survive, Holder says
"There will be a process to go through on that site, just as their was a process we went through on the Western Fair site," he said.
Mayor Ed Holder said he doesn't see Gateway's decision to move as bad news.
"Businesses have to choose what's best for them," he said. "This is the decision that Gateway felt was most appropriate."
Holder said he believes the Fair District will be able to rebound from losing the casino as a tenant.
"I've got a lot of confidence in Western Fair's ability to adapt to the changing business conditions," he said. "They've done that before and I've got great confidence in their management team."